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NAB (ASX:NAB) share price slides as potential Forum fraud deepens

NAB might have exposure to the latest alleged fraud saga. Here's how…

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Mitchell Lawler
Mitchell stumbled upon the concept of investing when in high school, devotedly urging his parents to put some money into a handful of technology companies with increasingly popular products among his demographic – many of which have gone on to great success. It wouldn’t be until 2017, some five years later, that Mitchell became an investor of his own money. Having studied and worked as a mechanical engineer in the building services industry, Mitchell takes a methodical and analytical approach to evaluating businesses. Rather than relying purely on numbers, Mitchell drills beyond a company’s metaphorical mantle to unearth obscure patterns or competitive advantages that would go otherwise unnoticed. His expertise resides within areas such as software, consumer goods, and building services equipment. However, his quest to find quality companies that set the industry standard and flex some degree of an impenetrable position has no limits – small cap to mega cap, cosmetics to healthcare – if it’s an exceptional business it’s on his radar.
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The National Australia Bank Ltd (ASX: NAB) and its share price are being scrutinised today. This comes as the potential Forum Finance fraud situation drags another ASX bank share into the mix.

At the time of writing, the NAB share price is off by 0.44% to $25.90. However, it is not alone in the red sea on Friday. All big four banks are showing weakness to finish the week.

stressed woman with laptop

Image Source: Getty Images

Forum Finance creating muddy waters

The potential fraud saga involving Forum Finance continues to grow murkier. Only a couple of weeks ago, Westpac Banking Corp (ASX: WBC) revealed it had uncovered a potential case of fraud.

The matter relates to a portfolio of equipment leases with Westpac customers arranged by Forum Finance, founded by Bill Papas.

On Friday, reports from The Australian are suggesting NAB may also hold exposure to the fallout.

While the bank acted as Forum Finance's transactional banker, it is believed Australia's third-largest bank also holds a substantial chunk of the mortgages against Papas' property portfolio.

Papas' assets might be at risk of being reassumed to cover debts. This follows Westpac appointing McGrathNicol as liquidators. At this stage, the exact whereabouts of Papas is unknown.

Other regulatory pressures

The Forum Finance dilemma is not the only matter potentially weighing on the NAB share price. Both NAB and the Commonwealth Bank of Australia (ASX: CBA) could also be suffering some negative sentiment due to allegations involving BSP Financial Group (ASX: BFL).

The Australian Financial Review reported senior managers of the group have been ordered to be removed following breaches of anti-money laundering laws in Papua New Guinea. Consequently, CBA and NAB are caught in between due to providing 'correspondent' banking services to BSP.

Based on Australian law, both banks are mandated to carry out regular due diligence assessments on correspondent banks.

NAB share price recap

Unfortunately for shareholders, the NAB share price has been the worst-performing so far in 2021 out of the big four banks. On a year-to-date basis, NAB has returned 12.9%. Meanwhile, CBA is up 16.8%; ANZ is up 18.7%; and Westpac is up 26.7%.

Following the dip in the NAB share price, the bank's market capitalisation is now $85.84 billion.

Motley Fool contributor Mitchell Lawler owns shares of Commonwealth Bank of Australia. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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